Depreciation is calculated on the____________?
Correct answer: C. Cost+ Transport+ Installation expenses
- A. Cost price of asset
- B. Market price
- C. Cost+ Transport+ Installation expenses
- D. Cost or market values whichever is less
Explanation
Depreciation is based on the asset’s total capitalized cost, which includes purchase cost plus directly attributable transport and installation expenses. Market value is not normally the depreciation base.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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